Safety-net hospitals under threat with reimbursement cuts

With federal proposals to target hospital payments, John Haupert, president and CEO of Atlanta's Grady Health System--Georgia's biggest safety-net hospital--said the change could potentially have a $4.6 million-per-year impact on the hospital system, Georgia Health News reported.

With a loss of about $25 million in 2011, cuts to Medicaid, which makes up a substantial portion of Grady's revenue, could further stress the hospital. It already has taken cost-cutting measures, including trimming staff, in light of reduced federal and state funding.

"We as a safety-net hospital will have trouble absorbing additional cuts in Medicaid payments. At the federal level, there's a bill that would reduce payments [for hospital outpatient clinic visits] to what a physician is paid in their private office," Haupert said.

Like Grady Health System, other safety-net hospitals across the country are worried about their futures with reimbursement cuts.

"The very existence of safety-net hospitals is at stake," Mark Newton, president and CEO of Chicago's Swedish Covenant Hospital, wrote in a letter to the editor of the Chicago Sun-Times. "Across-the-board rate cuts would deliver a fatal blow to our hospitals that serve ethnically diverse urban communities."  

Washington, D.C., Vermont, California and Maine have the highest populations on Medicaid, with the national average at 16.5 percent, The Wall Street Journal reported.

Maine, whose Medicaid population is at 23 percent, is considering $80 million more in Medicaid cuts for the next fiscal year to combat a $120 million shortfall in the current fiscal year. But some say Medicaid keeps the rate of uninsured residents low and that removing people from Medicaid would only shift the cost to hospitals and force them to provide more charity care, the article noted.

"The focus needs to be on the health of the patient. If it doesn't happen, and the economy doesn't significantly turn around, the safety net will just keep getting bigger," Haupert said in the Georgia Health News article.

For more information:
- read the Georgia Health News article on Kaiser Health News
- here's the WSJ article
- read the Chicago Sun-Times letter

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